I don't usually care that much about the market. I called 'get out' on CNBC at 13,300 in August 2007 and I was off by months and about 1200 points. I called 'get in' in March at 6700 but I said quite publically that I didn't know if the Dow was going to 2500, I was just buying cheap stocks. I called 'get out' in June 2011 and back in in October 2011. And now I'm out again. I think I'm early. And I think I don't know what's going on in Mr. Market's head.
The chairman of the Federal Reserve just came out with QE3 because the economy is in trouble. Although the statistic for unemployment is 8.1%, the actual unemployment is closer to 19%. Three quarters of companies are expected to report below estimated earnings. China is obviously slowing down and taking the entire mining and coal sectors with it along with Brazil and Australia. And Europe is in recession and hanging on by such thin threads as Mario Draghi and the ECB being willing to support Spanish and Italian bonds. Libya, Tunisia, Egypt, Sudan, Iraq, Afghanistan, Pakistan, Iran, and Syria are gigantic messes that blow up on alternating Thursdays.
The only good news is when the bad news is not as bad as expected or when someone from some central bank says the word 'rescue'. Cost of gas, cost of school, cost of food are all skyrocketing. Good thing the Federal cost of living index doesn't include any of those or we'd have to admit we've got inflation in spite (or, more accurately, because of abnormally low bond interest rates.
The Fed just poured the stimulus to the mortgage banking industry in the vain hope that people who couldn't qualify for a 3.5% mortgage might get the bank to lend to them at 3%. Good luck on that one.
And if you own gold you could be happy, I suppose. It will do well against an evermore debauched dollar.
And meanwhile the rest of us are trading so I want to offer this word about that: The trend is your friend. If you are going long on a stock that is in a downtrend, you will die the death of a thousand cuts even with vigilent use of the Tools. So be careful that you're picking stocks that are indeed in an uptrend.
Or, better yet if you're not sure, sit tight in cash until you are sure. For the last 30 years, the best investments I've made are often the ones I didn't make. And most of the time I've sat in cash it was a good thing to be doing.
Trying to make sense of why Mr. Market is frothing the Dow into near record range is 'a tale told by an idiot, full of sound and fury, signifying nothing....' (Macbeth).
This is a market of desperate men seeking yield in a 1.7% world. Its a prayer for construction and recovery, a naked bet we make it by God ... and forget the fundamentals, the downside, the irrationality of it all. You're either in or you're not and if you're not then too bad for you because this is going up, by God. By God.
If wishes were horses, beggers would ride.
Now go play.